Your Money: What You Need to Know About Naming an Executor

An executor is the person you designate to handle the settlement of your estate after you die, taking over your assets through probate, a court-supervised process that winds up your affairs in the state where you own your property. was living at the time of his death.

Typically, the executor is a spouse or close family member, but you may want to name a professional executor, such as a bank, attorney, or professional trustee in a trust company. In any case, an executor has a duty to be honest, fair, and financially responsible, and he or she should be someone you trust to carry out your wishes as you please. Don’t forget to name one or two backup executors in case the primary executor rejects the job.

naming your executor in your will; Responsibilities

For the court to accept your appointed executor, you must name that person in your will. If your executor meets your state’s legal requirements and is otherwise fit to serve, the court generally approves the application. Your executor’s duties may include:

• Tracing and collecting your assets, including the debts you owe

• Listing and Valuing Your Property

• Providing notice to your creditors (eg, credit card companies, banks, retail stores)

• Filing of wealth tax return and payment of wealth tax, if any

• Pay any debts or other taxes

• Distribution of your property according to your will and law

• Providing detailed reports of how the property was disposed of to the court and all interested parties

If you do not name an executor in your will, or if the executor cannot serve for some reason, or if you die without a will, the court will appoint an administrator to dispose of your assets.

In addition, managing an estate can be a lot of work, and it is fair and reasonable to compensate an executor for their efforts. You can decide to leave a percentage of your assets to them as part of your will; Usually it can be between 1% to 5% of the value of your property.

Documenting your assets and liabilities

To make your executor’s life easier, it’s a good idea to gather records to show where your assets and liabilities reside, as well as a contact list for advisors who have direct knowledge of your affairs. Updated balance sheets and cash flow statements are invaluable, as is an asset list prepared by your financial advisor. It’s also helpful to have a spreadsheet listing all your financial accounts, online account logins, along with the contact information of your attorney, financial advisor and tax preparer.

Be sure to include any beneficiary-directed workplace retirement plans such as 401(k) or 403(b) plans, IRAs, and life insurance policies. And it’s a good idea to mark any assets without a beneficiary designation, such as vehicles, cash in a savings account, savings bonds, stock certificates, valuables and other assets. Leaving clear instructions on how you want to distribute these assets among your heirs, such as filling out a payable death (POD) form at your bank, will make your estate disposal process much easier for your executor. Review these beneficiary designations regularly to make sure they still reflect your wishes.

Finally, if your estate has a trust, you’ll want to be sure that your appointed executor is prepared to meet the terms of the trust, as they often complicate arrangements for managing assets for the benefit of another person. can reflect. Make sure your executor reads the trust document before committing to serving as trustee.

Prepare tax returns and answer beneficiary questions

Generally, taxes must be filed for the decedent in the year of death. But the issue of taxes will often arise more broadly from beneficiaries asking about estate taxes and taxes on distributions. Unless you are also the beneficiaries’ tax advisor, you should recommend that they speak to their tax professional to understand the tax implications of their inheritance.

You may get questions about property taxes. For an estate to be subject to federal estate tax, it needs to exceed $12.06 million for an individual or $24.12 million for a married couple. But many states have their own estate or inheritance tax laws with much lower limits — $3 million in Minnesota and $5 million in Maryland, for example.

Other tax questions that may come up include how inherited IRAs, annuity distributions and capital gains are taxed, including whether the asset in question received a move on basis. Since tax issues get complicated quickly, you should consult with your tax advisor and recommend that beneficiaries do the same.